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GM Ends Controversial 'Jobs Bank' Monday

POSTED: Wednesday, January 28, 2009
UPDATED: 2:36 pm EST January 28, 2009

General Motors Corp. said Wednesday that its "jobs bank" program will end Monday, following a similar move at Chrysler LLC that helps satisfy the conditions the government imposed when it lent the automakers $17.4 billion late last year.

The program, which gives union workers at the Detroit Three most of their pay and benefits while they are laid off, was the target of much ire during the companies' requests for a federal bailout.

"That's problematic to me, it seems to me you are asking us for a $25 billion to support a clause that no other business in this country would be tolerated," said Sen. Harry Reid during congressional hearings.

GM spokesman Tony Sapienza said Wednesday that the 1,600 GM workers in the jobs bank will be placed on layoff and will need to file for unemployment. They'll receive about 72 percent of their salaries, which will be paid for by state unemployment benefits and GM subsidies.

The length of time workers can receive the benefits varies from state to state but usually amounts to about 48 weeks, Sapienza said.

There were more than 12,000 American autoworkers that were involved in the job banks in December, which was established in 1984 between the UAW and the Big Three during contract negotiations.

Each of the auto companies contributed millions and sometimes billions of dollars to the job bank.

The original intent of the job banks was so idled workers could be employed on community projects or learn new skills. Some people show up, but are never called to work. However, they are still paid.

"We got to figure out a better way of doing that. They can't just keep people sitting around on cots and not really earning their money," said Sterling Heights resident Rex Stanford.

Christine Moroski, a spokeswoman for the United Auto Workers union, declined to comment.

Sapienza said the move will allow cash-strapped GM to use state unemployment benefits to help cover some of the costs of paying the workers.

"We really appreciate the union's willingness to work with us as we continue to restructure for long-term viability," Sapienza said.

Union officials said late last week that Chrysler was eliminating its jobs bank effective Jan. 26. Like at Detroit-based GM, Chrysler's affected workers will continue to receive supplemental pay to make up much of their wages after unemployment compensation.

Auburn Hills, Mich.-based Chrysler was also required to eliminate its jobs bank as a condition of its $4 billion in Treasury Department loans. GM was granted $13.4 billion and already has received $9.4 billion of those funds.

The terms of the loans call for GM and Chrysler to eliminate "the payment of any compensation or benefits to U.S. employees of the company or any subsidiary who have been fired, laid-off, furloughed, or idled, other than customary severance pay."

It has been unclear whether this provision also requires the companies to eliminate the supplemental pay they provide while workers collect unemployment benefits.

Both automakers must submit plans by Feb. 17 showing that they can become viable. If the Treasury isn't satisfied with the plans, the government could call in the loans at the end of March.

Ford Motor Co. didn't take any government money, but company officials and UAW president Ron Gettelfinger have said they expect the Dearborn, Mich., automaker to get the same concessions as the other companies so its not disadvantaged.
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